The main funding source for Foxcom Industries are corporate bonds (50%) and equity (50%). Foxcom industries...

The main funding source for Foxcom Industries are corporate bonds (50%) and equity (50%). Foxcom industries is contemplating of undertaking the following activities. As a bondholder would you object to any of the following? Explain your answer for each of the following activities in detail.

Activities Undertaken by Foxcom Industries

Planning to issue new corporate bonds to fund production of clean energy

Planning to pay dividends to shareholders

Planning to invest in production of industrial roberts that has very low success rate

Rejecting projects related to production of electric cars because the NPV of the projects are very low.

2) Finland Treasury has issued $1,000 face value, 4-year bonds that pay annual coupons at a rate of 9 per cent. The market interest rate is currently at 9%.

a) what would be the bond’s market value (price)?

b) Calculate the duration of the bonds.

c)The market interest rates increased sharply just after the issue. What is the percentage change in price if market rate is 9.5 per cent. What is the new price?

Solutions

Expert Solution

ekkarill92 answered 1 year ago

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